Fuel crisis and supply shortages are a product of the UK’s economic mode

4th Oct,2021

Fuel crisis and supply shortages are a product of the UK’s economic mode

Everything appears to have happened in a flash. Only a few months ago, the government was praising itself for how quickly the UK had recovered from the epidemic. However, as the evenings have grown longer, there have been bare grocery shelves, rising energy prices, and long lines at gas stations. If there's a broad sense of amusement about any of this, it shouldn't be. This is what happens when just-in-time manufacturing and government combine, turning an issue into a catastrophe. The financial catastrophe of 2008 has certainly not taught us anything. Then came the revelation of just-in-time banking's basic flaw: institutions lacked sufficient capital buffers to withstand losses. A similar issue has now arisen in manufacturing supply chains; there is insufficient slack in the system to deal with an unanticipated shock. Just-in-time supply chains were created to reduce waste and expenses by focusing on lean manufacturing and small inventories. However, while management consultants adored them, they were only useful in good times. In the instance of automobile manufacturing, the issue was a scarcity of computer chips. In the case of energy, when economic recovery took root, gas supply could not keep up with demand — particularly from Asia. Supply constraints have afflicted every country on the planet, but Britain has been hit harder than others. The reason for this is because the British system of government is built on a seat-of-the-pants approach, with practically no preparation and a messianitic attitude. One example is the scarcity of HGV drivers. For more than a decade, the haulage sector has been warning of issues, advising ministers that more drivers were departing than joining the business, and that shortages would be worsened by Brexit. Even when the situation was exacerbated by the epidemic, the government did little and instead responded by issuing 5,000 temporary permits to international lorry drivers. This is an example of doing too little, too late. It will be fascinating to watch how many drivers are enticed to come to the UK for (at most) two months of work. In all probability, it will fall short of 5,000.